How to reduce international money transfer fees in SG

Tired of paying high fees every time you send money to other countries? If you work with Chinese suppliers or manage a global payroll, you know just how quickly international money transfer fees can add up. On average, sending money overseas through a bank involved a whopping fee of 7.34% in 2013.¹

While the value of remittances worldwide is expected to reach 858 billion USD by 2024², with Asia-Pacific being a key market that has the highest value of cross-border payments in total³, these cross-border transactions often come with expensive fees and hidden costs that can impact a company's bottom line. In this guide, we'll explore how international money transfer works and provide a money transfer fee comparison between Singaporean banks and financial institutions. We’ll also offer useful tips to help you achieve cost-effective money transfers.

Guide to international money transfer fees in Singapore

Introduction to international money transfer for businesses

International money transfer refers to the process of sending money across borders. This can be done for various reasons, such as paying suppliers or employees, investing in foreign markets, or even sending money to family and friends. In this article, we'll delve specifically into international money transfer for businesses and the fees associated with it.

Also Read: What is a Telegraphic Transfer (TT) and how it works

What are transfer fees?

Transfer fees encompass the costs associated with moving money from one account to another. These fees vary significantly based on the financial institutions or providers chosen, the amount of money transferred, and the nature of the wire transfer — domestic or international. For international wire transfers that involve the SWIFT network, a global messaging system used by banks for secure communication, additional SWIFT fees will likely be passed down to the sender. 

Domestic wire transfer fees are applied to transactions within the same country and are generally lower, reflecting the lesser complexity and cost involved in processing these transfers.

In contrast, international wire transfer fees are higher due to the increased intricacies of navigating across different banking systems, currencies, and regulatory environments. These fees comprise various components, including handling charges by both the sending and receiving banks, cable charges such as SWIFT fees, and agent bank fees if the transaction involves intermediary third-party banks.

Understanding these fees is crucial for businesses to execute cost-effective transactions. For instance, Airwallex offers international money transfers to 150+ countries.. Their partnerships with local payment rails in 110+ countries significantly bring down the transfer fees involved as well as the time needed to complete a transaction by bypassing the SWIFT network, making them a popular choice for businesses looking to save on costs.

How does international money transfer work?

International money transfers facilitate the flow of funds between different countries through a network of banks or financial services providers. Here's the step-by-step process of how it works:

1. The sender initiates a payment request and transfers funds to a money transfer operator, which could be their bank or a fintech provider like Airwallex.

2. This operator then transmits the money transfer instructions to the recipient's bank via a secure messaging network like SWIFT.

3. During the money transfer process, intermediary banks may be involved in routing the payment message, which may add additional fees to the transaction.

4. Upon receiving the payment instructions, the recipient's bank credits their account with the transferred funds, usually within several business days.

To provide businesses with a quicker and more affordable way to send money abroad, Airwallex simplifies international money transfers by partnering with local payment rails in 110+ countries. This ensures same-day international transfers for 70% of transactions, while minimising costs associated with intermediary banks.

In today's global commerce landscape, the ability for businesses to send and receive international money transfers is crucial for ensuring smooth financial operations across borders. eCommerce businesses and wholesalers, for example, rely on seamless cross-border transactions to receive payments from global customers, maintaining a consistent cash flow. Moreover, businesses use international transfers to send money to their global suppliers, which are often based in China or Vietnam, including China remittance services, and manage payroll for employees located in different countries, facilitating international supply chains and operations with efficiency. This global connectivity offered by cross-border payments enables companies to operate with greater agility and access opportunities in the international marketplace.

How to reduce international money transfer charges?

To mitigate the costs associated with international bank money transfers, businesses can consider the following strategies:

1. Select financial providers with no or low transfer fee: Traditional banks often charge a significant handling fee for international money transfers, making it an expensive option for businesses. On the other hand, alternative financial providers like Airwallex offer no or low transfer fee for international transactions thanks to their ability to bypass the SWIFT system. With a transparent fee structure, businesses won’t have to worry about any hidden costs that may arise. In the next section, we’ll go into more details about the various types of transfer fees when conducting international money transfers. 

2. Compare FX rates: Choose financial providers like Airwallex that offer market-leading exchange rates compared to traditional bank rates.

3. Adopt multi-currency accounts: Airwallex Global Accounts allow you to receive, hold, and send funds in 23+ currencies, reducing the need to convert currencies and thus, minimising exchange rate losses and conversion fees.

4. Plan ahead for transfers: By planning and scheduling transfers in advance, you can avoid rush fees and select the timing of your transfer to coincide with favourable exchange rates, considerably reducing costs.

5. Consolidate payments: Instead of executing multiple smaller transactions, consolidate payments to suppliers or employees into fewer, larger transactions. This practice can significantly reduce the per-transaction fees and also streamline the payment process.

Top apps/websites for the cheapest international money transfers

Businesses seeking cost-effective online solutions for international money transfers can consider the following: 

• Wise offers a transparent percentage pricing structure for its transfer fees and real mid-market exchange rates.⁴

• WorldFirst charges minimal transfer fees in fixed prices and competitive exchange rates of up to 0.6%.⁵

• Airwallex stands out for its robust all-in-one financial platform offering zero transfer fees and market-leading FX rates, with access to 150+ countries and 60+ currencies.⁶

How to transfer large sums internationally with lower fees?

When transferring large sums internationally, selecting financial providers that offer no or low transfer fees is crucial in minimising costs. Consider opting for specialised financial institutions such as Airwallex or the aforementioned providers. These alternative providers are designed to support global commerce, offering more competitive rates and lower fees as part of their core services. See how Igloohome saves 100 SGD per SWIFT transfer by using Airwallex. By choosing a provider with a transparent fee structure and no hidden costs, not only is Igloohome able to foresee the total expenses more accurately, but they can also benefit from streamlined transactions tailored for their high-volume transfers. 

What are the different types of transfer fees?

When carrying out international money transfers, businesses typically encounter several types of fees, each contributing to the total cost of the transaction. Understanding these fees is vital for financial planning and maintaining cost efficiency in global operations.

• Handling charges are fees applied by banks for the administrative costs associated with processing international transactions. These charges cover the bank's service of managing the complexities of navigating different national banking systems and ensuring regulatory compliance. Handling charges are often influenced by the amount of money being transferred and the transaction's urgency.

• Cable charges refer to the costs associated with the digital transmission of transaction details across electronic payment networks, such as SWIFT. These charges cover the operational expenses of securely sending payment messages between banks and financial institutions internationally.

• Agent bank charges occur when transactions require the involvement of intermediary banks to facilitate the transfer between the sending and receiving banks. These charges are levied by the intermediary banks for their role in ensuring the funds reach the intended destination, especially when the two main banks do not have a direct financial relationship. Agent bank charges can vary widely, depending on the number of intermediaries involved and the complexity of the transfer route.

Airwallex revolutionises international money transfers by eliminating handling charges charged by traditional banks. Moreover, instead of relying on the SWIFT network like most banks, Airwallex leverages its partnerships with local payment rails. This approach minimises cable charges and agent bank fees for payments to 110+ countries, offering businesses seamless, direct, and cost-efficient money transfers across borders.

Transfer fees vs Exchange rates

Transfer fees and exchange rates are two components that determine the overall cost of international money transfers.

Transfer fees are usually fixed or percentage-based charges charged by banks or financial institutions for facilitating the cross-border transfer of funds. These fees include handling charges, cable charges, and agent bank charges, as mentioned above.

Exchange rates, on the other hand, determine how much one currency is worth in terms of another. Banks and financial providers apply a currency conversion rate to exchanges between different currencies, which may include a markup over the mid-market rate — the real rate at which banks trade currency amongst themselves. This markup may be a less obvious cost compared to transfer fees but can substantially inflate the overall expense of a transaction, especially in sizable transfers.

Using Airwallex, businesses can eliminate traditional transfer fees and leverage their global payments network to make direct, cost-efficient transactions. They can also enjoy market-leading currency exchange rates, closely matching the mid-market rate, thereby significantly reducing the overall cost of cross-border payments.

International money transfer fees comparison: Banks, financial institutions and money transfer services in Singapore

International transfer fees can significantly vary across banks, financial institutions, and money transfer services. Traditional banks generally impose higher fees, often a flat rate charge that can range anywhere from 10-100 SGD. 

Fintech providers and financial institutions, however, typically offer more competitive rates, including lower or even waived handling fees, aiming to provide a more cost-effective solution for international transactions.

Below, you can find a direct comparison of international money transfer fees between banks and alternative financial institutions:

How Airwallex saves business’ money on international transfer fees

Airwallex offers an end-to-end financial platform designed to minimise the costs of global transactions. One of the key ways Airwallex achieves savings for businesses is by eliminating transfer fees. Businesses can open an Airwallex Global Account for free and start transacting in 23+ currencies right away. Boasting partnerships with local payment networks across key regions including Singapore, Malaysia, and Hong Kong, Airwallex charges $0 handling or cable fees when businesses transfer funds to these countries. This transparent pricing model is precisely why Singapore SMEs like Dreamcore choose to work with Airwallex. Before using Airwallex, Dreamcore was frustrated about the time-consuming process of exchanging foreign currencies and paying their overseas suppliers. By switching over to Airwallex, Dreamcore is able to access exchange rates close to the mid-market rate and complete their whole transaction within minutes, saving the business both time and money.

Conclusion

International money transfers are often made up of a range of charges, such as handling fees, cable fees, and agent bank fees. Together, these traditional banking fees significantly bump up the total cost of making global transactions. Luckily, Airwallex provides a far more cost-effective, transparent, and efficient alternative for global financial transactions by removing transfer fees. Learn more about how you can save on international transfer fees by signing up today.

Frequently asked questions

1. When is the best time to transfer money internationally?

The best time is often when the exchange rate is favourable, meaning the currency you have is strong against the currency you intend to send, allowing you to save costs on conversion fees.

The Airwallex Global Account allows you to receive, hold, and send funds in 23+ currencies. You can enjoy the flexibility of transferring money at your convenience, using funds directly from your multi-currency business account, without worrying about fluctuations in exchange rates.

2. Which bank has the lowest international transfer fee?

Traditional banks often embed a complex structure of fees in international transfers, such as commission, cable charges, and intermediary bank fees. However, fintech companies like Airwallex significantly lowers or completely removes these traditional fees for international transfers. In particular, Airwallex charges zero or close to zero transfer fees for payments to 110+ countries.

3. What are the common misconceptions about international money transfer fees?

A prevalent misconception is the belief that all banks and financial institutions charge uniform fees, irrespective of the destination country/ currency and the method of transfer chosen. This assumption can lead to misinformed decisions, resulting in higher costs for your transactions. Another common misunderstanding is the notion that the exchange rate offered by banks is the only rate available, not realising that rates can differ among providers and that some may offer more competitive rates than others.

4. How can businesses ensure compliance with international money transfer regulations?

Most banks and financial providers implement robust Know Your Customer (KYC) procedures, which mandates that these money transfer providers verify the identity of their clients, understand their financial activities, and assess the risk they pose. This process involves collecting and analysing business identification documents, establishing the origin of the funds, monitoring transactions for unusual patterns, and reporting suspicious activities to the relevant authorities.

On the other hand, businesses should ensure their money transfer service provider is properly licensed by the Monetary Authority of Singapore (MAS) for global remittance and currency exchange operations. Staying updated and providing regular training for staff on regulatory changes and compliance requirements in Singapore are also essential.

5. What are the risks involved in using digital platforms for international money transfers?

Digital platforms for international money transfers may come with cybersecurity threats, such as phishing, malware, and hacking, which can compromise sensitive financial information. Moreover, there may be an increased risk of fraud with scammers targeting users of digital transfer services.

To minimise the risks involved, Airwallex implements strict security protocols, including encryption and multi-factor authentication, to protect their customers' data and transactions. Additionally, they continuously monitor for any suspicious activities to detect and prevent fraudulent behaviour.

6. How can businesses save on costs when it comes to international money transfers?

Businesses can significantly reduce their expenditure on international money transfers by seeking service providers that offer minimal transaction fees. Not only does Airwallex charge low to no international money transfer fees, it ensures transparency with no hidden fees.

Moreover, businesses that organise their transfers in advance can avoid the premium charges associated with expedited or express services. By forecasting their foreign exchange needs and scheduling transactions ahead of time, businesses can leverage transfer services at a lower cost.

7. How do exchange rate fluctuations affect international money transfers?

Changes in exchange rates can significantly impact the cost of international money transfers. When the currency you're holding depreciates against the recipient's currency, more funds are required to meet the same transfer value, increasing the cost. Conversely, if the currency you're holding appreciates, the transfer becomes cheaper.

Therefore, businesses should strategise to mitigate adverse effects and capitalise on favourable shifts. Alternatively, they can leverage multi-currency accounts such as Airwallex to manage transactions in 23+ global currencies. This approach enables them to receive, hold, and send funds efficiently without being affected by currency volatility.

8. What documentation is required for large international money transfers?

When making large international money transfers, it is crucial for your bank or financial provider to confirm that your business complies with the Know Your Customer (KYC) criteria. These measures are implemented to authenticate the legitimacy of your business and to thwart money laundering or fraud activities. You may be asked to provide proof of identification, business registration documents, and details of the transaction's purpose.

Make sure to choose a service provider that is licensed as a Major Payment Institution (MPI) by the Monetary Authority of Singapore (MAS).¹² This designation ensures that the provider follows strict compliance measures and has robust security protocols in place to safeguard your information and funds.

Sources & references

1. https://www.statista.com/statistics/962701/costs-of-remittances-by-payment-type/

2. https://www.statista.com/statistics/962796/value-of-remittance-flows-globally/

3. https://www.statista.com/statistics/1422589/north-america-cross-border-payments-by-channel/ 

4. https://wise.com/sg/pricing/ 

5. https://www.worldfirst.com/sg/pricing/ 

6. https://www.dbs.com.sg/personal/deposits/pay-with-ease/international-transfers

7. https://www.ocbc.com/business-banking/help-and-support/accounts-and-services/business-pricing-guide 

8. https://www.uobgroup.com/uobgroup/rates/remittance-fees-outward.page

9. https://www.airwallex.com/sg/business-account/transfers 

10. https://wise.com/sg/pricing/business/send-money 

11. https://wise.com/help/articles/2932389/how-much-does-it-cost-to-convert-between-currencies 

12. https://www.mas.gov.sg/regulation/payments/licensing-for-payment-service-providers#_licensing-and-designation

*Note: This publication does not constitute legal, tax, or professional advice from Airwallex nor substitute seeking such advice, and makes no express or implied representations / warranties / guarantees regarding content accuracy, completeness, or currency.